The arrests were made following an operation involving up to 200 police officers. Five wanted officials remain at large. Federal Police allege the officials were involved in a scheme that has the potential to destabilise the 2014 FIFA World Cup and 2016 Olympic Games in Rio de Janeiro.

The group are said to have used up to R$3.05 million (US$1.88 million, £1.16 million)—allocated in government funding to train almost 2000 taxi drivers, waiters and hotel staff in the lead-up to the events—for private gain.

Federal Police say they intend to charge all 38 (including the five not yet apprehended) with criminal associations, fraud and embezzlement. If found guilty, they face up to twelve years imprisonment.

This is the latest in a string of corruption scandals throughout the nation, which saw Transport Minister Alfredo Nascimento and thirty colleagues resign in July, while a senior Agriculture minister was sacked. A further scandal claimed the President’s chief of staff earlier this year.

President Dilma Rousseff wrote in "Conversation with the President"—her weekly column—that "[i]t looks like corruption is increasing, but what really is increasing is the investigation and identification of criminals".

The arrests follow 63 similar anti-corruption operations carried out last year by Federal Police in conjunction with government organisations.

The nation now faces an uphill battle to be ready in time for the commencement of the 2014 FIFA World Cup, and the 2016 Olypmic Games.

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